Revised 102b resolution

PART IV. MODEL SUPPLIER POLICY

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PART IV. MODEL SUPPLIER POLICY

Principle 1—The Supplier will Prohibit Labor Trafficking and Child Labor in its Operations.

Commentary and Guidance on Principle 1:

The Supplier should:
1. Adopt a policy prohibiting the use of Labor Trafficking and Child Labor in its Operations;
2. Not knowingly tolerate any Labor Trafficking or Child Labor in its Operations; and
3. Certify to the Business that the product or service provided to the Business complies with the laws regarding Labor Trafficking and Child Labor of the country or countries in which the Business and Supplier has Operations relating to the products or services being provided by the Supplier to the Business.
The Supplier should notify the Business immediately if it learns of instances of Labor Trafficking or Child Labor.
The remaining Commentary and Guidance on this Principle are provisions that the Supplier may want to adopt depending on the results of the Risk Assessment.
The Supplier should encourage and, where appropriate, require its first-tier Suppliers to adopt the Model Supplier Policy set forth in this Part IV.
Where part of a supplier contract, the Supplier agrees that failure to comply with the relevant provisions is grounds for immediate termination of the contract.
The Supplier agrees to indemnify the Business and hold it harmless with respect to any violation of relevant laws and regulations, or for any civil or criminal liability arising from the contravention of the Business’s Policy by Supplier or any of its Suppliers of goods or services, including, but not limited to, any Remediation. Supplier also agrees that, in the event that the Business determines that a violation or contravention of relevant laws and regulations or the Business’s Policies may have occurred, the Business shall notify Supplier and Supplier shall immediately Remedy or Remediate or cause to be Remedied or Remediated, the potential violation or contravention. In the event that the Business determines that Supplier has not made a good faith effort to Remedy or Remediate the potential violation or contravention in order to comply with the law and/or the Business’s Policies, then the Business may terminate its Supplier contract immediately, and such termination will be with cause. In the event that the Business determines that Supplier has acted in good faith but has nonetheless failed to Remedy or Remediate the potential violation or contravention, the Business may execute any other appropriate remedy, including but not limited to the training and capacity building called for in Principle 3.

Principle 2—The Supplier will Conduct a Risk Assessment of the Risk of Labor Trafficking and Child Labor and Continually Monitor Implementation of this Policy.
Commentary and Guidance on Principle 2:

The Supplier will:
1. Conduct ongoing Risk Assessments of the risk of Labor Trafficking and Child Labor in its Operations. In conducting Risk Assessments, the Supplier should identify general areas where the risk of Labor Trafficking and Child Labor is more significant in terms of severity, scale, or probability and prioritize those for greater Due Diligence, Monitoring, Verification or other appropriate action under a given Policy; and
2. Require its Suppliers to conduct ongoing Risk Assessments.
The remaining Commentary and Guidance on this Principle are provisions that the Supplier may want to adopt depending on the results of the Risk Assessment.
The Supplier should draw on internal or external human rights expertise and, as appropriate to the size of the Business and the nature and context of its Operations, engage relevant Stakeholders in conducting all Risk Assessments.
Based on the Result of the Risk Assessment, the Supplier should examine areas of the Supplier’s Operations, its Suppliers and other parts of the Supply Chain with a material risk of Labor Trafficking and Child Labor to identify the extent to which it should:
1. Monitor its Suppliers’ implementation of this Policy;
2. Perform Due Diligence on Suppliers; and
3. Adopt a Verification program to ensure its own implementation of this Policy with appropriate executive oversight based on its governance structure.
4. The Supplier will cooperate fully in providing reasonable access to the Business and Qualified Independent Third-Party Monitors engaged in Due Diligence or Monitoring activities. The scope of Due Diligence, Monitoring, and the decision to use either specially trained Employees or Qualified Independent Third-Party Monitors, may appropriately vary depending on the Risk Assessment conducted in a given case.

Principle 3—The Supplier should: (i) Train Relevant Employees, (ii) Engage in Continuous Improvement, and (iii) Maintain Effective Communications Mechanisms with its Suppliers.
Commentary and Guidance on Principle 3:

The remaining Commentary and Guidance on this Principle are provisions that the Supplier may want to adopt depending on the results of the Risk Assessment.
The Supplier should train relevant employees, engage in continuous improvement¹¹, and maintain effective communication mechanisms.

The Supplier should communicate the Policy to key Stakeholders, including:
1. Employees, including managers, supervisors, and other staff with Supply Chain oversight;
2. Suppliers or agents, if applicable; and
3. Labor brokers, recruiters, and employment agencies, if used by the Supplier.
The Supplier should also publish this Policy or otherwise make it available to the public such as by posting this Policy on the Supplier’s website so that it is available to relevant Stakeholders.
The Supplier should implement a system that allows Employees, and Employee representatives where applicable, to raise issues regarding Labor Trafficking or Child Labor with the Business anonymously, without fear of reprisal, and in accordance with applicable privacy laws. In addition to establishing this system, the Business should publicize the availability of the system, such as by posting it on its website and requiring its prominent display at the workplace so that it is readily available to Business and Supplier Employees at all levels.

Principle 4 —The Supplier will Devise a Remediation Policy and Plan that Addresses Remediation for Labor Trafficking or Child Labor in its Operations.
Commentary and Guidance on Principle 4:

The Supplier should consult with relevant Stakeholders to devise a Remediation policy and plan that addresses:
1. Remediation for individual victims where the Supplier itself directly caused the Labor Trafficking or Child Labor; and
2. Remediation of broader patterns of non-conformance with this Policy caused by deficiencies in the Supplier’s systems or processes.
3. The Remediation policy and plan may appropriately vary depending on the Risk Assessment conducted in a given case.
The Remediation policy and plan of the Supplier should take into consideration all findings reported through Monitoring, Due Diligence, and Verification efforts or other sources.
Remediation for harm to individual victims should include protocols for appropriate immediate action to eliminate the Labor Trafficking and Child Labor and resources for reasonable and appropriate victim services designed to offset the harm experienced.
1. The business enterprise immediately responsible for the Labor Trafficking or Child Labor should remediate any harm to the individual victims.
2. To the extent that the responsible business enterprise is unwilling or unable to provide such Remediation, then the Supplier may choose to do so itself in coordination with a number of others including:
  1. the Supplier and other business enterprises in the Supply Chain;
  2. other Businesses that utilize the responsible business enterprise; and
  3. local government, NGOs and other Stakeholders.
3. If the Supplier chooses to provide all or part of the victim Remediation, then it may be able to rely on the indemnification recommended in Principle 1 for reimbursement.

PART V. MODEL GLOSSARY
“Business” - [name of Business or Supplier adopting these Policies].¹² The term “business enterprises” refers to businesses generically.

“Child Labor” - Work performed by a person who is under the minimum legal working age to be employed as determined by (i) a Business’s or Supplier’s policy, (ii) the law of the jurisdiction in which the work will be performed, or (iii) the International Labor Organization Minimum Age Convention No. 138 - whichever indicates the higher minimum age requirement.¹³

“Due Diligence” - The ongoing process of investigating the facilities, policies, and labor practices of potential and contracted Suppliers to help confirm that no Supplier engaging in Labor Trafficking or Child Labor enters the Business’s Supply Chain.

“Labor Trafficking” - The act of recruiting, harboring, transporting, providing, or obtaining a person for involuntary labor or services by means of force or physical threats, fraud or deception, or other forms of coercion.¹⁴ Labor trafficking shall also include:

“Trafficking-Related Activities” – All activities that directly support or promote Labor Trafficking or Child Labor, including but not limited to: (i) using misleading or fraudulent recruitment practices during the recruitment of employees, such as failing to disclose basic information or making material misrepresentations regarding the key terms and conditions of employment, including wages and fringe benefits, the location of work, living conditions and housing (if employer-provided or employer-arranged), any significant costs to be charged to the employee, and, if applicable, the hazardous nature of the work; (ii) charging employees recruitment fees; and (iii) destroying, concealing, confiscating, or otherwise denying access by an employee to the employee's identity documents, such as passports or drivers' licenses.¹⁵

“Monitoring” - The process of investigating and evaluating the implementation of these Policies by the Supplier(s) of the Business or Supplier through announced and unannounced visits conducted on randomly selected Suppliers and carried out by (i) specially trained Employees of the Business or Supplier or (ii) Qualified Independent Third-Party Monitors.

“Operations” – Activities involved in the day-to-day functions of the business conducted for the purpose of generating profits, including, but not limited to, its employment-related and Supply Chain practices.

“Qualified Independent Third-Party Monitors” – An organization with no affiliation with the Business Supplier or their Employees, that has a demonstrated expertise in conducting qualitative and quantitative reviews of potential Labor Trafficking and Child Labor within the Operations of Business or Supplier.

“Remediation” - Activities, systems policies or procedures that the Business or Supplier establishes to address and remedy confirmed instances of Labor Trafficking or Child Labor in its operations.

“Remedies” - Financial or nonfinancial compensation awarded to victims of Labor Trafficking or Child Labor.

“Risk Assessment” - An ongoing analysis conducted by a Business to ascertain whether or not in a given circumstance there is a significant risk of Labor Trafficking or Child Labor by considering such factors as the type and location of the business being conducted, the history of Labor Trafficking and Child Labor in the industry or sector, the Operating context, the particular products or services involved, and other relevant factors.

“Stakeholder” - Any individual or entity having an interest in the Business developing and maintaining a Supply Chain free of Labor Trafficking or Child Labor including but not limited to Employees, labor service intermediaries, non-governmental organizations and governments.

“Supplier” - Organizations and individuals in the Business’s Supply Chain who contracts directly with the Business or a Supplier.

“Supply Chain” - Any organizations or individuals involved in providing services to the Business or producing, processing, or distributing the Business’s products from the product’s point of origin to the Business or point of sale, as applicable.

“Verification” - Process by which the Business or Supplier evaluates itself or is evaluated by a Qualified Independent Third-Party to determine its degree of success in implementing and enforcing this Policy. This includes an evaluation of (1) data gathered through Monitoring activities to ensure results are reliable, objective and obtained via a credible process; and (2) whether any Remediation has been implemented, and if so, if such Remediation is objective and effective. The scope of Verification may appropriately vary depending on the Risk Assessment conducted in a given case.

PART VI. ENDNOTES
¹ Guiding Principles on Business and Human Rights: Implementing the United Nations “Protect, Respect and Remedy Framework,” A/HRC/17/31, 21 March 2011. The ABA endorsed this approach in in February 2012. See ABA Report & Recommendation on UN Guiding Principles on Business & Human Rights: http://www.americanbar.org/content/dam/aba/directories/policy/2012_hod_midyear_meeting_109.doc

² Id.

³ International Labour Organization, Forced Labour Global Estimate, http://www.ilo.org/global/about-the-ilo/newsroom/news/WCMS_181961/lang--en/index.htm which has been commended by the US Department of Labor http://www.ilo.org/sapfl/News/WCMS_182302/lang--en/index.htm.

⁴ Id.

⁵ Id.

⁶ International Labour Organization: International Program on the Elimination of Child Labour: http://www.ilo.org/global/topics/child-labour/lang--en/index.htm#a2.

⁷ United Nations Resources for Speakers on Global Issues, http://www.un.org/en/globalissues/briefingpapers/childlabour/quotes.shtml.

⁸ See for example Section 1502 of the Dodd Frank Act relating to conflict minerals; the 2008 amendments to the Trafficking Victims Protection Act relating to Fraud in Foreign Labor Contracting and Benefiting Financially from Peonage, Slavery, and Trafficking in Persons; the California Transparency in Supply Chains Act—SB 657; and President Obama’s Executive Order 13627 and the National Defense Authorization Act for Fiscal Year 2013.

⁹ Commentary to Paragraph II (a) 11, UN Guiding Principles on Business and Human Rights.

¹⁰ A framework for the training and continuous improvement activities referred to in this Model Principle 3 will be found in the Database of Resources to be provided. For now, please refer to the Department of Labor’s ILAB Toolkit at http://www.dol.gov/ilab/child-forced-labor/step4/index.htm].

¹¹ Id.

¹² The definition of “Business” is intended to include: United States businesses, formed under the laws of the United States, doing business domestically and abroad, as well as foreign businesses, formed under the laws of countries other than the United States doing business in the United States, without distinction between size, industry and/or regulated or non-regulated status. The definition of “Business” for purposes of these Policies means any sole proprietorship, partnership, corporation, limited liability company, limited partnership, limited liability limited partnership and other forms of business organizations as may be defined under the laws of any country and includes all affiliates, subsidiaries, divisions, other business units of a Business; provided, however, that a subsidiary may adopt the Policies even if its parent has not done so.

¹³ Child Labor is subject to numerous definitions. Child Labor definitions vary both in terms of the applicable ages and the work permitted to be performed by children. Notwithstanding these varied definitions, the International Labor Organization (ILO) provides helpful guidance. The ILO notes that “[o]ne of the most effective methods of ensuring that children do not start working too young is to set the age at which children can legally be employed or otherwise work.” ILO Minimum Age Convention 138, which separately has been endorsed by the ABA, generally sets 15 as the youngest age that children can work. However, the possible exceptions in Articles 6 and 7, as well as variations for qualifying developing countries (as defined by the ILO), could allow 12 to 14 year-olds to work. For hazardous work, 18 is the youngest acceptable age, although 16 and 17 year-olds can work “under strict conditions.” Many Business policies referring to Child Labor incorporate the ILO definitions and indicate age limitations varying from 14 to 16 years of age, subject to local child labor law, which in some cases could permit a child younger than 14 to work. Therefore the Model Policies definition adopts, as a minimum legal working age, the age permitted by ILO Minimum Age Convention 138 under the particular circumstances the However child employment, which under the ILO Minimum Age convention may be permissible, becomes Labor Trafficking when the employer maintains control over the child through the use of force, fraud, and/or coercion and this control results in the child's belief that he or she has no other choice but to continue to work for this employer. It does not matter whether the child is over the minimum of age or not. If the child believes that he or she has no other option, i.e., cannot attend school, through the use of force, fraud and/or coercion then the actions of the employer rise to the level of Labor Trafficking, irrespective of ILO Minimum Age Convention 138.

¹⁴ Labor Trafficking has no single definition. Those entities that have sought to address it – including governments, international organizations, and members of civil society – have defined Labor Trafficking differently, reflecting the variety of activities that may constitute such conduct. Nevertheless, these definition share common elements that may prove helpful in guiding a Business or Supplier in its efforts to address Labor Trafficking in its operations. The Database of Resources will contain the U.S. and international legal definitions of labor trafficking, as well as domestic and international definitions of related concepts, such as human trafficking, trafficking in persons and forced labor. Like labor trafficking, all of these terms are defined differently by various entities but also have many common elements. Forms of Labor Trafficking can include forced labor in underground markets and sweatshops, as well as in legitimate businesses, including those in the manufacturing, travel, entertainment, hospitality, agricultural, service, and extractive industries. Movement of persons is not required for Labor Trafficking to exist; i.e., Labor Trafficking can occur without the victim leaving his or her hometown. People may be considered victims of Labor Trafficking regardless of whether they were born into a state of servitude, were transported to the exploitative situation, previously consented to work for a the individual controlling them, or participated in a crime as a direct result of being trafficked, including the use of illegal substances. These facts become irrelevant once a person is compelled to work by force, fraud, or coercion, which can occur at any point within the employment cycle.

¹⁵ Trafficking Related Activities, refer to those actions, usually employed by labor brokers, to facilitate Labor Trafficking and Child Labor. These Model Policies use the definition contained in Executive Order 13627 issued by President Obama on September 25, 2012.

GENERAL INFORMATION FORM

Submitting Entity: Section of Business Law

Submitted By: Dixie L. Johnson, Chair

1. Summary of Resolution(s):

The ABA Model Business and Supplier Policies on Labor Trafficking and Child Labor include eight black letter Principles, with an “Introduction,” a “Model Glossary,” “Commentary and Guidance” in connection with each of the Principles, and endnotes. The Policies are intended to assist businesses in identifying and addressing issues of labor trafficking and child labor in their operations.
The four black letter Principles contained in the Model Business Policy portion of the Policies are: (1) the business will prohibit labor trafficking and child labor in its operations; (2) the business will conduct a risk assessment of the risk of labor trafficking and child labor and continually monitor implementation of this Policy; (3) the business should: (i) train relevant employees, (ii) engage in continuous improvement, and (iii) maintain effective communications mechanisms with its suppliers, and; (4) the business will devise a remediation policy and plan that addresses remediation for labor trafficking or child labor in its operations.
The four black letter Principles contained in the Model Supplier Policy portion of the Policies are: (1) the supplier will prohibit labor trafficking and child labor in its operations; (2) the supplier will conduct a risk assessment of the risk of labor trafficking and child labor and continually monitor implementation of this Policy; (3) the supplier should: (i) train relevant employees, (ii) engage in continuous improvement, and (iii) maintain effective communications mechanisms with its suppliers; and (4) the supplier will devise a remediation policy and plan that addresses remediation for labor trafficking or child labor in its operations.
The first Resolved clause in the proposed Resolution reflects the American Bar Association’s adoption, as a matter of ABA policy, of the “black letter Model Principles of the ABA Model Business and Supplier Policies on Labor Trafficking and Child Labor, dated February 2014,” which consists of only the Principles ~~and applicable portions of the Model Glossary that define terms used in the Principles~~. The second Resolved clause in the proposed Resolution urges businesses to adopt and implement their own business and supplier policies on labor trafficking and child labor that are consistent with the black letter Model Principles of the Policies to assist them in identifying and addressing issues of labor trafficking and child labor in their operations.
2. Approval by Submitting Entity.
August 10, 2013

3,3. Has this or a similar resolution been submitted to the House or Board previously?
No.
4. What existing Association policies are relevant to this Resolution and how would they be affected by its adoption?
In 2007, the House of Delegates adopted a general policy urging corporate adherence to international human rights principles in the conduct of business activities (see Resolution 110B, adopted August 2007). The ABA subsequently adopted a resolution in 2012 endorsing the United Nations Framework for Business and Human Rights, its companion Guiding Principles on Business and Human Rights, and the “Human Rights” provisions of the OECD Guidelines for Multinational Enterprises (see Resolution 109, adopted February 2012). Resolution 109 also urged governments, the private sector and the legal community to integrate those principles into their respective operations and practices, including the principle that enterprises should “have a policy commitment to respect human rights.” (Id. at 1 and 11).
From 1996-2011, the House of Delegates adopted seven policies relating specifically to combating human trafficking. In particular, the House adopted resolutions: urging federal, state, and other governments to pass legislation that protects and assists human trafficking victims and bolsters prevention efforts (see Resolution 110C, adopted August 2007); urging state and other legislatures to enact legislation that aids minors who are victims of human trafficking in various ways (see Resolution 103A, adopted August 2011); urging federal and state governments to enact legislation protecting unaccompanied and undocumented immigrant children in various ways, including proper screening to determine if they are victims of trafficking, abuse, or abandonment that could be a basis for immigration relief (see Resolution 103D, adopted August 2011); and urging federal, state, and other governments to enact laws and regulations and develop policies assuring that those identified as victims of human trafficking should not be prosecuted for non-violent crimes directly related to their status as human trafficking victims (see Resolution 104F, adopted February 2013).
The House of Delegates also has adopted resolutions: supporting legislation that would allow human trafficking victims charged with prostitution or other non-violent crimes directly relating to their status as victims of human trafficking to assert an affirmative defense (see Resolution 104G, adopted February 2013); urging federal, state and other governments to aid human trafficking victims by enacting laws permitting the victims to vacate their prostitution and other non-violent crimes directly related to their trafficking victimization and providing funding for those programs, and urging bars, law school clinics, and other legal assistance providers to develop pro bono programs and provide pro bono representation to help victims to vacate those offenses (see Resolution 104H, adopted February 2013).

In addition, the House of Delegates has adopted a resolution urging federal, state, local and other bar associations to work with judges, lawyers and other professionals with human trafficking expertise to develop and implement training programs for judges, prosecutors, defense counsel, law enforcement officers, immigration officials, civil attorneys and other investigators to enable them to identify and help human trafficking victims in various ways (see Resolution 104I, adopted February 2013).

The proposed Resolution adopting the black letter Model Principles of the ABA Model Business and Supplier Policies on Labor Trafficking and Child Labor and urging businesses to consider adopting and implementing their own policies that are consistent with the black letter Model Principles of the ABA Model Policies is consistent with, and would complement, each of the above-described existing ABA policies by providing another useful and practical tool for business enterprises to help address issues of labor trafficking and child labor in their operations.
5. What urgency exists which requires action at this meeting of the House?
There currently are no standard business conduct codes for combatting labor trafficking, child labor, and trafficking-related activities. At the same time, businesses are expected to operate in an environment of increased societal knowledge and concern regarding human labor trafficking and child labor. And an increasing number of international, federal, and state laws are affecting businesses in addressing labor trafficking and child labor, with laws criminalizing such conduct, imposing civil liability, and requiring public disclosure of efforts taken to guard against labor trafficking and child labor. The Model Principles of the ABA Model Policies ~~are~~is designed to assist businesses that do not currently have codes of conduct in place, as well as those businesses that have adopted codes but wish to modify them to reflect best evolving practices, in order to promote public trust and confidence in the businesses’ attention to corporate social responsibility.
6. Status of Legislation. (If applicable)
While there are a number of pending bills in Congress that contain provisions regarding prevention of human trafficking and protection and assistance for victims of trafficking, none specifically addresses the issue of business and supplier conduct policies.
7. Brief explanation regarding plans for implementation of the policy, if adopted by the House of Delegates.
The Section plans to publish the ABA Model Business and Supplier Policies on Labor Trafficking and Child Labor widely, post them on its website, and work with the ABA Task Force on Human Trafficking and other entities within and outside the ABA in promoting awareness of the Policies and encouraging businesses to adopt and implement (or revise) their own business and supplier policies on labor trafficking and child labor that are consistent with the black letter Model Principles of the ABA Model Policies. In all instances, the Section will state that the policy adopted constitutes the Model Principles of the Model Policies.
8. Cost to the Association. (Both direct and indirect costs)
None.
9. Disclosure of Interest. (If applicable)
Not applicable.
10. Referrals.
This resolution has been sent to the following ABA entities, requesting support, or co-sponsorship (where appropriate under the current Instructions for Filing Resolutions with Reports and Informational Reports to the House of Delegates):
Task Force on Human Trafficking

Delaware State Bar Association

Section of Individual Rights and Responsibilities

Section of Criminal Justice

Section of Environment, Energy and Resources

Section of International Law

Section of Labor and Employment Law

Law Student Division

Section of Litigation

Section of Public Contract Law

Senior Lawyers Division

Section of Tort Trial and Insurance Practice

Young Lawyers Division

Section of Science & Technology Law

Center on Children and the Law

Center for Human Rights

Commission on Domestic & Sexual Violence

Commission on Youth at Risk

Referral also was made to the following Affiliated Organizations:
Conference of Chief Justices

National Association of Attorneys General

National Conference of Commissioners on Uniform State Laws

11. Contact Name and Address Information. (Prior to the meeting. Please include name, address, telephone number and e-mail address)

William D. Johnston, Esquire

Secretary, Section of Business Law

Young Conaway Stargatt & Taylor, LLP

Rodney Square

1000 N. King Street

Wilmington, DE 19801

Phone: (302) 571-6679

E-mail: wjohnston@ycst.com

12. Contact Name and Address Information. (Who will present the report to the House? Please include name, address, telephone number, cell phone number and e-mail address.)
William D. Johnston, Esquire